This work involved the risk analysis software forming a key element of the analysis model that supported the Stern Review, the largest and most widely referenced report on the economic impact of global warming.

Dr Chris Hope, reader in policy modelling at Judge Business School used @RISK to develop PAGE2002 (for Policy Analysis of the Greenhouse Effect). This model assisted staff at Stern to investigate climate change across the world. Issues including the impacts of sea level rising and increases in temperature were balanced against the cost of the various options available to tackle the problem, such as alternative energy sources and reducing oil-fuelled traffic. The model aims to enable people to make informed decisions on the optimum way to deal with climate change.

The PAGE 2002 model aggregates information from various other sources to use as inputs. Therefore it uses scientific studies and knowledge for details on the climate's sensitivity on an increase in CO2 emissions. It combines this with economic expertise to look at the effect of an increase in temperature on gross domestic product (GDP).

In particular, the Stern Review looked at the social cost of carbon (SCC), measured in terms of the economic impact of the extra damage done by each additional tonne of CO2 in the atmosphere. The @RISK PAGE2002 model helped it to determine that if, for example, one extra tonne was going to cause $100 worth of damage in the long term, then any activity costing less than $100 which resulted in at least one less tonne of emissions was therefore both viable and desirable.

@RISK also deals with the problem that the different effects of various factors which influence climate change are themselves, undetermined. For example, the historical evidence does not accurately predict potential rises in global temperatures if CO2 emissions double. Using @RISK in the PAGE2002 model, researchers can quantify this uncertainty, providing a measurement of the accuracy of their findings.

Dr Hope explains: "We needed the flexibility offered by @RISK in order to build a range of models to handle the uncertainty that goes hand-in-hand with climate change and its effects. The fact that the software works in Excel also makes it easy to use and ensures that the results generated are transparent. This ensures that the outputs are understood by everyone."

The Stern report proposed that one percent of global GDP should be invested per year in order to avoid the worst effects of climate change. Failure to do so has the potential to reduce global GDP by up to 20 percent. As climate change continues to be a global issue, Judge Business School continues to use its PAGE2002 @RISK modelling tool to advise on ways in which to tackle it.

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